It's Not About Telecom

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How much worth of telecom equipment did you sell in the last fiscal? I asked the CEO of a leading telecom equipment company. He smiled at me. “I don't know if we now sell telecom products any more. I think we now sell IT products,” he said, without any expression on his face. I was not very sure, so I turned to a service provider. “Just have a look at our website,” the head of marketing of a leading cell-phone company told me, “and you will see that more than being a telecom operator, we are managing voice, data and video information for our customers. Actually, we are an information management company. Our telecom network is just the backbone.” I could understand.

Telecom biggies such as Alcatel, Nortel, Motorola and Ericsson primarily sold hardware equipment that made sure that two-way voice exchange could happen. But today, their equipment and solutions need to be highly intelligent and agile. Telecom equipment should now be able to handle hundreds of types of services around voice, data, and video for a wide range of customers. Just look at the software component that is now getting built into their equipment. In fact, software is the heart and soul of any telecom equipment now. Many of the telecom equipment giants are now focusing on product R&D, and outsourcing manufacturing. So are Alcatel, Motorola, and Ericsson.

Look at companies like TCS, Wipro and Infosys. Revenues from telecom activities such as developing embedded software for mobile handsets, soft switches, service roll-out testing for operators, OSS/BSS solutions, churn management solutions, managed network services, and many more is on the rise. In many cases this revenue stream is becoming as big as BFSI, or even more. And this is core telecom work. Way beyond being a big vertical for these companies, telecom is now becoming their main specialization area. Shall we, therefore, call TCS, Wipro and Infosys telecom companies.

So who is a telecom company, in the traditional sense? The telecom equipment vendors are not very sure. The service providers do not want to be branded as telecom service providers, and rightly so. They are actually now handling communications and information management services for their customers, and not just voice calls. On the other hand, the traditional software companies seem to be doing more and more of telecom work. When Voice&Data identifies the top telecom equipment companies, will TCS and Infosys, in the next few years, be even bigger companies than Nokia and Siemens. We have seen this happening in IT-HCL, HP and Compaq have been completely overtaken by TCS, Wipro and Infosys. The debate will be futile. But the trends are clear. Telecom, which has now been re-christened as communications, is becoming big. Numbers as well as requirements of enterprises as well as mass-market consumers is shooting up. Next generation networks and convergence are leading to stronger bonding between telco networks and enterprise networks. Therefore, traditional telecom players need to have products and solutions, either separate or built into their telco offerings, for enterprise applications.

The role of IT in telecom is on the rise. So more and more IT companies will try and grab this opportunity with products and services that were traditionally termed as communications. Their revenue from communications products and services will continue to grow. And that is what is finally important. This year's overall message is that the Indian communications market is happening. The growth is good, vendors are busy selling, and users are having a great time. And that the show will continue for the next several years!

<ibrahima@cybermedia.co.in>